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Hello everyone, today XM Forex will bring you "[XM official website]: The rebound in factory orders has lagged behind, the VIX surge has sounded the alarm, and the market is closely watching NVIDIA's financial report." Hope this helps you! The original content is as follows:
On Tuesday, dragged down by weak U.S. employment data, the U.S. dollar index fell intraday, but remained strong amid the sell-off in technology stocks. As of now, the U.S. dollar is quoted at 99.54.
Federal Reserve - ① Trump suggested that the candidate for the chairman of the Federal Reserve has been decided, and wzhdjgj.complained about being blocked from firing Powell. ② Barkin: Agree with Powell’s view that a rate cut in December is not a certainty, and both inflation and employment are at risk.
ADP Weekly Employment Report: In the four weeks ending November 1, private sector employers lost an average of 2,500 jobs per week.
The U.S. government released some initial claims data: most were revised upward; the number of people applying for unemployment benefits for the first time in the week of October 18 was 232,000.
The release time of a new batch of data in the United States has been finalized, involving the CFTC weekly report, PPI, etc. The initial jobless claims data during the shutdown will be supplemented on Thursday.
Trump’s approval rating has hit a low, with dissatisfaction over the cost of living and the Epstein case sparking dissatisfaction.
Yuxing Bank: The four major games between Britain, the United States and Japan are gathering, and analysts predict that the volatility of the foreign exchange market will be significantly amplified at the end of the year
Although the current implied foreign exchange (FX) volatility is relatively low and market activity usually declines as the holidays approach, we believeCurrency volatility is likely to increase significantly over the remainder of the year. This is mainly due to the following four key factors in the policies and political games of the United Kingdom, the United States, and Japan: 1. The end of the U.S. government shutdown will prompt the market to focus more attention on the FOMC meeting on December 10. If the economic data released during this period disappoints, it will provide new fuel for Europe and the United States. Currently, forward contracts reflect a slightly higher than 50% chance that the Fed will cut interest rates next month.
2. U.S. President Trump is likely to announce the candidate for the new chairman of the Federal Reserve in December (U.S. Treasury Secretary Bessent is expected to submit the final list of five candidates after the Thanksgiving holiday on November 27). Before Fed Chairman Powell's term ends in May next year, the new nominee's remarks (as "shadow Fed chairman") may diverge from Powell himself, causing investors to worry about the course of U.S. economic policy.
3. In Japan, although Japanese authorities have recently warned of excessive and unilateral foreign exchange fluctuations, investors may test whether preventing the yen from returning to the 160 mark is the real wzhdjgj.commitment of policymakers. This will increase pressure on the Bank of Japan (BoJ) to intervene (and not just verbally) and may even prompt an early resumption of tightening at its December 19 meeting.
4. After the British budget is announced on November 26, the pound may face new pressures, including: concerns about the British debt burden, the prime minister may face leadership challenges, and more easing policies in the future. We still expect significant monetary easing in the UK next year, with interest rates falling to $2.75\%$, which is more than 50 basis points higher than current forward rates imply. This prospect is likely to further drag the pound lower.
Blackstone: The Fed has limited room for further easing, and the sharp deterioration of the labor market is the only variable
Regarding the current U.S. labor market, Fed Chairman Powell once described the U.S. labor market as "low hiring, low layoffs." This trend is also visible in data from the Bureau of Labor Statistics (BLS). We believe there is a risk that layoffs will increase if corporate margins wzhdjgj.come under substantial and sustained pressure. Given the current low demand for labor, it may take longer for the recently unemployed to find new jobs. Considering that consumer spending accounts for two-thirds of U.S. GDP, any potential pullback in consumer spending will act as a headwind to economic activity.
The labor market is particularly important ahead of the upcoming FOMC meeting on December 9th and 10th because it is related to the Federal Reserve’s dual mission of maximum employment and price stability. Recently, Fed officials have held mixed views on which risks policy should focus on. Among them, Atlanta Fed President Bostic, who is more hawkish, said that moving monetary policy to or into an accommodative area risks detaching consumer and business inflation expectations. San Francisco Fed President Daly noted that with "the labor market softening rapidly" and "inflation rising less than many predicted at the beginning of the year," the balance of risks has become clear.transfer.
Our current baseline scenario is still that the Fed will engage in a monetary policy normalization cycle rather than turning to easing. Given that this cycle has already seen a cumulative 150 basis points of interest rate cuts (starting in 2024), unless the labor market deteriorates sharply, we believe there is limited room for further interest rate cuts.
Scotiabank: The market is worried about the tone of the upcoming data
The U.S. dollar has generally weakened after the U.S. government shutdown ended. Previously, Trump signed an order stating that state employees would resume work one after another. In the subsequent short period of time, the overall market trading was calm, but the US dollar fell during the European trading session. The falling trend of the US dollar index is pushing the market below the previous upward trend, and the current chart structure has become slightly weaker. Bonds were mostly weaker and U.S. stock futures were mixed, leaning slightly to the downside. This is obviously not a positive reaction to the government's reopening and may reflect investors' concerns about the tone of the upcoming re-release of U.S. economic data. September's non-farm payrolls data will be released this Thursday, while November's non-farm payrolls are expected to be released before the December Fed decision, and October's data may be skipped entirely. The current weakness in the U.S. dollar index points to bets that weak data will strengthen the prospects of further interest rate cuts. However, recent speeches by Fed officials have shown significant internal disagreements over the December policy decision, which has undermined market confidence in the path of U.S. interest rate cuts. Interest rate swap pricing also reflects the market's uncertainty about the outcome of the last interest rate meeting this year. The current probability of an interest rate cut is about 50-50. However, our current core view on the dollar index tilting to the downside remains unchanged.
ING Bank: The yen has missed the opportunity to recover, and speculators may take the opportunity to exert more pressure?
The recent wave of selling in risk assets should have created recovery conditions for the oversold yen, but under the influence of special reasons, the US dollar against the yen continues to have buying support. The most important of these is that the erroneous remarks of Japanese Prime Minister Takaichi Sanae may damage the prospects of its tourism industry. You must know that this is one of the most profitable industries for Japan.
Although high-level diplomatic talks have been arranged and the risk of further escalation appears limited, the development is enough to cast more doubts on the Bank of Japan's ability to raise interest rates in December. The third-quarter data released yesterday further strengthened the dovish view. The data showed that the Japanese economy shrank by 1.8% on an annualized basis, while the inflation deceleration indicator was lower than expected to 2.8%.
Speculators are obviously more interested in buying the dollar against the yen in order to test the tolerance of Japan's Ministry of Finance, while the impact of the Ministry of Finance's verbal warnings on the market is gradually weakening. We still believe that the Ministry of Finance is more inclined to intervene in currency markets following dollar-negative events (such as weak employment or inflation data), as it did in July 2024.
The above content is all about "[XM official website]: The rebound in factory orders has lagged behind, the VIX surge has sounded the alarm, and the market is closely watching NVIDIA's financial report". It was carefully wzhdjgj.compiled and edited by the XM foreign exchange editor. I hope it will be useful to you.Trading helps! Thanks for the support!
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